this week, we plan to review the entire scope of this agency's operation, with the exception of the Investment Division. We hope to have an opportunity to review the implementation of the Small Business Investment Act at a later time.

The committee has heard both praise and criticism of the Small Business Administration-and more particularly its loan program. The SBA has been charged with being a giant lending agency. On the other hand, we have many complaints that it is most difficult to secure even a minimum SBA loan because of much redtape and the difficulty involved. We are aware that SBA has been of great help to many areas of the small business segment of our economy. The committee deems it to be our duty to assist the SBA in attempting to serve the small business community in every way possible.

I might say we feel this committee is an arm to support the SBA wherever possible.

We want to see SBA function efficiently. We approach these hearings in an objective way—with an attitude of cooperation. This committee and Congress are vitally concerned about the welfare of small business and we want to see the Small Business Administration live up to its declared goals and objectives.

Gentlemen, we all know-and I will not introduce-but present, the members of our committee:

Congressman Wright Patman, of Texas, is the author of the original resolution which created the first Small Business Committee. He was the longtime chairman of this committee and is now chairman of the House Banking and Currency Committee, and we are certainly pleased he is continuing to serve with us on this committee.

Hon. Abraham Multer, of New York, Hon. Tom Steed, of Oklahoma, and Hon. James Roosevelt, of California, are veteran members of the committee.

The new members on the majority side are Hon. John Kluczynski, of Illinois, and Hon. John Dingell, of Michigan; and we have:

Hon. William M. McCulloch-the ranking minority member-of Ohio; Hon. Arch A. Moore, Jr., of West Virginia; Hon. William H. Avery, of Kansas; Hon. H. Allen Smith, of California; Hon. Howard W. Robison, of New York; and Hon. Ralph Harvey, of Indiana.

I want to take this opportunity also to introduce our general counsel, Mr. Richard L. Mitchell, who is here on my right, the minority counsel, Mr. John J. Williams, and the clerk of our committee is Miss Myrtle Ruth Foutch, who is most efficient but who has one liability. She is from Tennessee.

Mr. Administrator, we are pleased to welcome and to greet you. We will be pleased to hear you, and we want you to proceed as you wish, either with your formal statement, which I understand you have, or otherwise. If you will introduce members of your staff at this time, you may do so. You may proceed now as you wish.

TESTIMONY OF JOHN E. HORNE, ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION; ACCOMPANIED BY IRVING MANESS, DEPUTY ADMINISTRATOR FOR PROCUREMENT AND TECHNICAL ASSISTANCE; C. R. LANMAN, DEPUTY ADMINISTRATOR FOR FINANCIAL ASSISTANCE; WILLIAM SIMPSON, DEPUTY ADMINISTRATOR FOR MANAGEMENT AND RESEARCH ASSISTANCE; KEITH HANNA, ASSISTANT ADMINISTRATOR (CONTROLLER); FREDRIC T. SUSS, GENERAL COUNSEL; DR. STANLEY CROOK, ECONOMIC ADVISER; WILLIAM STURDEVANT, SPECIAL ASSISTANT FOR CONGRESSIONAL LIAISON; SAMUEL KLEIN, CHIEF, FOREIGN TRADE DIVISION, P. & T.A.; AND PHILIP ZEIDMAN, SPECIAL ASSISTANT TO THE ADMINISTRATOR

Mr. HORNE. Thank you very much, Mr. Chairman.

If I may, sir, first I want to extend congratulations to you as the new chairman of this committee. As you know, you have had distinguished predecessors.

I am sure you will also make a most commendable record.

Secondly, I want to assure each member of this committee that I welcome your surveillance of this agency. We appreciate your interest in our programs and we are grateful for your encouragement.

We fully expect you to criticize us when you find reasons for doing so, and we know that those criticisms will be well intended and will be constructive.

Last Friday we sent to the committee advance copies of our printed statement. This is rather a long statement, so, with your permission, we will not read from the entire text. Rather, I will cover just very briefly our foreign trade effort, and then ask each of the Deputies to do the same for the other programs we are to discuss today, and the programs which they administer.

Then, if time permits, Mr. Chairman, I would like to mention briefly two or three of our most troublesome problems within the agency. May I now at this time introduce the people with me.

To my immediate right, and this is the way they will follow me, is Mr. Irving Maness, Deputy Administrator for Procurement and Technical Assistance.

The CHAIRMAN. The gentleman is well and favorably known. He was formerly with this committee.

Mr. HORNE. Fine, sir.

To my far left is Mr. William Simpson, Deputy Administrator for Management and Research Assistance.

To my immediate left is Mr. C. R. Lanman, Deputy Administrator for Financial Assistance, and to my far right is Mr. Hanna, who is Assistant Administrator (Controller), and who has statistics and factual information about which members of the committee may inquire.

Fredric

There are other members of our staff in the room with me. Suss is here, our General Counsel; Dr. Stanley Crook, who is our chief economic adviser; and William Sturdevant, who heads our congressional liaison office.

Those are the only ones I will introduce at this time.

The CHAIRMAN. Mr. Horne, at this point we will receive for the record in its entirety that portion of your formal statement which pertains to foreign trade.

(The information referred to follows:)

STATEMENT OF JOHN E. HORNE, ADMINISTRATOR, SMALL BUSINESS ADMINISTRATION

Mr. Chairman and members of the committee, the purpose of these hearings, as I understand it, is to review the operations of the Small Business Administration. It would not be feasible to include in my statement a detailed description of SBA's activities. Therefore, in accordance with the committee's wishes, I will concentrate on those programs which are of primary interest at the present time.

FOREIGN TRADE

In July 1961, the Foreign Trade Division was established in SBA. The Division's principal purpose is to stimulate the interest of small businessmen in international trade and to assure that adequate consideration is given to the small business interest in all of the Government programs relating to foreign trade. These activities have been undertaken with the addition to our staff of only one person.

Under an agreement with the Department of Commerce, SBA has meshed into its regular activities programs which are specifically designed to counsel and assist small businessmen to expand into exports. These include export trade conferences and courses which are cosponsored by SBA, educational institutions, business and trade groups and other Government agencies. They also include management aids dealing with export trade subjects; the survey reports of studies made pursuant to the management research grant program which deals specifically with small business as related to a particular aspect of export trade; and the published results of foreign trade research under section 8 (c) of the Small Business Act.

Pursuant to section 8(c) a research study entitled, "Export Marketing for Smaller Firms," is being completed. This was prepared for the Small Business Administration by the International Marketing Institute, a nonprofit educational foundation for education and research at the Harvard Graduate School of Business Administration. The study is being readied for publication and will be available for sale by the Superintendent of Documents. A draft of the study has been furnished the committee staff.

Further SBA activities, under the Commerce/SBA agreement, include cooperative efforts with operating units of the Department of Commerce under which SBA, through its Foreign Trade Division, directly solicits small business participation in the export programs of that Department; such as trade centers, trade missions and trade fairs. These programs offer excellent opportunities for small businessmen to promote the sale of products abroad and to make valuable contacts with foreign buyers and sales agents. I should like to enumerate the results we have been able to achieve in connection with these three programs of the Department of Commerce.

U.S. TRADE CENTERS

Trade centers are permanent installations where the products of different industries are displayed. Each trade center showing is based on the collective marketing experience of specialists from the Department of Commerce, industry, and trade associations. Each has a trade promotion staff that conducts an extensive promotion campaign to attract buyers and prospective agents for exhibited products. Each trade center usually conducts several industry shows per year. Only goods made in the United States can be displayed.

U.S. trade centers are operating in London, Bangkok, and Frankfurt. other trade center will open in Tokyo on April 2, 1963.

An

SBA, through its Foreign Trade Division, has, to date, invited over 1,000 small manufacturers, on a selective basis, to exhibit their products at seven trade center shows. The types of products exhibited include toys and games; automotive service and maintenance equipment; industrial instruments and laboratory apparatus; small farm machinery and irrigation equipment; and business machines and office equipment.

On the average, between 30 and 60 exhibitors are able to display their products at a single trade center show. Due to the efforts of the Commerce Department and SBA, a larger number of small concerns are participating as exhibitors at these shows. For example, at least 13 of the exhibitors at the industrial instruments and laboratory apparatus show to be held in Tokyo beginning April 2 are small business concerns which were solicited by SBA.

TRADE MISSIONS

A trade mission is a selected group of business specialists who have volunteered to carry specific business proposals to international markets. These men do not represent themselves or their companies; they represent the whole of the U.S. business community. A trade mission spends from 3 to 5 weeks abroad in a specific country; and they meet with business groups abroad. Their purpose is to discuss business proposals from American businessmen. Upon their return, the mission members meet in city conferences with U.S. businessmen, at various cities throughout the country, to discuss trade and investment opportunities which the mission has developed abroad.

SBA actively encourages small business concerns to participate in all aspects of the trade mission program by becoming mission members; by submitting business proposals; and by attending city conferences to obtain firsthand information about trade and investment opportunities.

Almost half of the mission members are small businessmen. SBA, through its field offices, contacts small concerns to advise them of forthcoming trade missions and urges that they submit business proposals to be carried by the mission. We have participated in soliciting business proposals from small business: nen for trade missions to the United Kingdom, Germany, Israel, Cyprus, Japan, Philippines, Greece, Italy, Spain, Mexico, Peru, and Chile. In an effort to develop oversea trade opportunities for small concerns, SBA has arranged to bring small businessmen in for consultation with mission members at 74 city meetings.

TRADE FAIRS

The purpose of U.S. participation in trade fairs is to tell the story of American free enterprise and to sell U.S. goods. Small business concerns are encouraged by SBA to exhibit their products in U.S. exhibitions at international trade fairs. Greater small business participation is anticipated in future commercial-type trade fairs.

COUNSELING ASSISTANCE

In addition to our activities in connection with trade missions, trade centers, and trade fairs, we provide counseling assistance to small businessmen seeking to get started in, or to expand, export operations. Every effort is made to provide the small businessman as much individual attention as possible. This includes not only personal counsel, a matter of helping the small businessman analyze the adjustments he will have to make prior to exporting, but help in formulating an action program. We try to direct the small businessman to sources, both in Government and in industry, that will assist him to develop a practical approach to exporting.

Last year, a small concern contacted our St. Louis office to discuss the possibilities of getting Government contract work. This firm, which employs 27 people, manufactures firetrucks. It purchases the truck chassis and builds a firetruck with all of the necessary components. The industrial specialist in our St. Louis office discussed the possibilities of the firm getting Government contract work, and also tried to interest the firm in selling abroad. The owners of the firm felt that there was no real opportunity for sales overseas. One of the principal deterrents in their minds was the fact that their plant is located in the Midwest. They considered this a serious handicap. When they left our St. Louis office, they were unconvinced about their export potential.

Within a week, one of our men in St. Louis spotted a trade lead in International Commerce, the weekly Commerce Department magazine. He called this to the attention of the firm's management and asked the local office of the Commerce Department to encourage the firm to mail out some price lists and brochures. Through the joint efforts of both agencies, the Department of Commerce and SBA, this firm got started in exporting. It has since made sales in Lima, Peru; Damascus, Syria; and Bangkok, Thailand. In addition it has participated in a trade fair and has an agent in Peru. The company appears to be well on the way to achieving permanent results in exporting.

Another phase of counseling assistance to small businessmen relates to the needs of many small concerns which are interested in bidding on oversea procurements financed by the Agency for International Development. SBA seeks to direct these concerns to the proper operating offices in AID so that they may bid on such procurements.

We believe that the small businessman's stake in the future of international trade is very high. Small business cannot afford to isolate itself from the patterns of national growth. Since international trade is a significant segment of the economic spectrum, its potential as an additional source of profits should not be ignored by small business. We have ample evidence to demonstrate clearly that many small concerns have ventured into foreign markets and have prospered there.

I do not wish to suggest that the task is simple or that small business is free of certain disabilities when it attempts to enter foreign markets. Development of oversea markets requires the expenditure of time and money. Many smaller concerns are not situated so favorably that commitments of funds or personnel can be undertaken easily.

It is our hope for the future that SBA in conjunction with other agencies of the Government and with private sources will be able to assist small businessmen to develop the managerial know-how essential to success in foreign trade.

The CHAIRMAN. You may proceed as you desire.

Mr. HORNE. Now, to move into the foreign trade area: In July 1961, the Foreign Trade Division was established in the Small Business Administration.

The Division's principal purpose is to stimulate the interest of small businessmen in international trade and to assure that adequate consideration is given to the small business interest in all of the Government programs relating to foreign trade. These activities have been undertaken with the addition to our staff of only one person.

Under an agreement with the Department of Commerce, arrived at under the auspices of the Bureau of the Budget, SBA has meshed into its regular activities programs which are specifically designed to counsel and assist small businessmen to expand into exports. These include export trade conferences and courses which are cosponsored by SBA, educational institutions, business and trade groups, and other Government agencies. They also include management aids dealing with export trade subjects; the survey reports of studies made pursuant to the management research grant program which deals specifically with small business as related to a particular aspect of export trade; and the published results of foreign trade research under section 8 (c) of the Small Business Act.

I might say that under the grant research program we have a publication, entitled "Participation of Missouri Firms in Export Trade." While this was done under the grant program with a Missouri college outlet, the principles involved, of course, are general, because the problems that the small business firms of Missouri would meet in export trade would also be applicable to small businesses in other parts of the country.

Under our 8 (c) research program a study on exporting is being completed. We have sent to the committee a draft of this study. Its title will be "Export Marketing for Smaller Firms." We believe this study will be a very sound contribution toward helping small businesses get into the export field. This study was prepared for the Small Business Administration by the International Marketing Institute, which, as you know, is a nonprofit education foundation for education and research at the Harvard Graduate School of Business Administration. We also have several publications on foreign trade. These are